THE PRESIDENT: Good morning. During the course of one week, the
situation in the Middle East has deteriorated dramatically. Last
Wednesday, my Special Envoy, Anthony Zinni, reported to me that we were
on the verge of a cease-fire agreement that would have spared
Palestinian and Israeli lives.

That hope fell away when a terrorist attacked a group of innocent
people in a Netanya hotel, killing many men and women in what is a
mounting toll of terror.

In the days since, the world has watched with growing concern the
horror of bombings and burials and the stark picture of tanks in the
street. Across the world, people are grieving for Israelis and
Palestinians who have lost their lives.

When an 18-year-old Palestinian girl is induced to blow herself up,
and in the process kills a 17-year-old Israeli girl, the future,
itself, is dying -- the future of the Palestinian people and the
future of the Israeli people. We mourn the dead, and we mourn the
damage done to the hope of peace, the hope of Israel's and the
Israelis' desire for a Jewish state at peace with its neighbors; the
hope of the Palestinian people to build their own independent state.

Terror must be stopped. No nation can negotiate with terrorists.
For there is no way to make peace with those whose only goal is death.

This could be a hopeful moment in the Middle East. The proposal of
Crown Prince Abdullah of Saudi Arabia, supported by the Arab League,
has put a number of countries in the Arab world closer than ever to
recognizing Israel's right to exist. The United States is on record
supporting the legitimate aspirations of the Palestinian people for a
Palestinian state.

Israel has recognized the goal of a Palestinian state. The
outlines of a just settlement are clear: two states, Israel and
Palestine, living side by side, in peace and security.

This can be a time for hope. But it calls for leadership, not for
terror. Since September the 11th, I've delivered this message:
everyone must choose; you're either with the civilized world, or you're
with the terrorists. All in the Middle East also must choose and must
move decisively in word and deed against terrorist acts.

The Chairman of the Palestinian Authority has not consistently
opposed or confronted terrorists. At Oslo and elsewhere, Chairman
Arafat renounced terror as an instrument of his cause, and he agreed to
control it. He's not done so.

The situation in which he finds himself today is largely of his own
making. He's missed his opportunities, and thereby betrayed the hopes
of the people he's supposed to lead. Given his failure, the Israeli
government feels it must strike at terrorist networks that are killing
its citizens.

Yet, Israel must understand that its response to these recent
attacks is only a temporary measure. All parties have their own
responsibilities. And all parties owe it to their own people to act.

We all know today's situation runs the risk of aggravating
long-term bitterness and undermining relationships that are critical to
any hope of peace. I call on the Palestinian people, the Palestinian
Authority and our friends in the Arab world to join us in delivering a
clear message to terrorists: blowing yourself up does not help the
Palestinian cause. To the contrary, suicide bombing missions could
well blow up the best and only hope for a Palestinian state.

All states must keep their promise, made in a vote in the United
Nations to actively oppose terror in all its forms. No nation can pick
and choose its terrorist friends. I call on the Palestinian Authority
and all governments in the region to do everything in their power to
stop terrorist activities, to disrupt terrorist financing, and to stop
inciting violence by glorifying terror in state-owned media, or telling
suicide bombers they are martyrs. They're not martyrs. They're
murderers. And they undermine the cause of the Palestinian people.

Those governments, like Iraq, that reward parents for the sacrifice
of their children are guilty of soliciting murder of the worst kind.
All who care about the Palestinian people should join in condemning and
acting against groups like Al-Aqsa, Hezbollah, Hamas, Islamic Jihad,
and all groups which opposed the peace process and seek the destruction
of Israel.

The recent Arab League support of Crown Prince Abdullah's
initiative for peace is promising, is hopeful, because it acknowledges
Israel's right to exist. And it raises the hope of sustained,
constructive Arab involvement in the search for peace. This builds on
a tradition of visionary leadership, begun by President Sadat and King
Hussein, and carried forward by President Mubarak and King Abdullah.

Now, other Arab states must rise to this occasion and accept Israel
as a nation and as a neighbor. Peace with Israel is the only avenue to
prosperity and success for a new Palestinian state. The Palestinian
people deserve peace and an opportunity to better their lives. They
need their closest neighbor, Israel, to be an economic partner, not a
mortal enemy. They deserve a government that respects human rights and
a government that focuses on their needs -- education and health
care -- rather than feeding their resentments.

It is not enough for Arab nations to defend the Palestinian cause.
They must truly help the Palestinian people by seeking peace and
fighting terror and promoting development.

Israel faces hard choices of its own. Its government has supported
the creation of a Palestinian state that is not a haven for terrorism.
Yet, Israel also must recognize that such a state needs to be
politically and economically viable.

Consistent with the Mitchell plan, Israeli settlement activity in
occupied territories must stop. And the occupation must end through
withdrawal to secure and recognize boundaries consistent with United
Nations Resolutions 242 and 338. Ultimately, this approach should be
the basis of agreements between Israel and Syria and Israel and
Lebanon.

Israel should also show a respect, a respect for and concern about
the dignity of the Palestinian people who are and will be their
neighbors. It is crucial to distinguish between the terrorists and
ordinary Palestinians seeking to provide for their own families.

The Israeli government should be compassionate at checkpoints and
border crossings, sparing innocent Palestinians daily humiliation.
Israel should take immediate action to ease closures and allow peaceful
people to go back to work.

Israel is facing a terrible and serious challenge. For seven days,
it has acted to root out terrorist nests. America recognizes Israel's
right to defend itself from terror. Yet, to lay the foundations of
future peace, I ask Israel to halt incursions into
Palestinian-controlled areas and begin the withdrawal from those cities
it has recently occupied.

I speak as a committed friend of Israel. I speak out of a concern
for its long-term security, a security that will come with a genuine
peace. As Israel steps back, responsible Palestinian leaders and
Israel's Arab neighbors must step forward and show the world that they
are truly on the side of peace. The choice and the burden will be
theirs.

The world expects an immediate cease-fire, immediate resumption of
security cooperation with Israel against terrorism. An immediate order
to crack down on terrorist networks. I expect better leadership, and I
expect results.

These are the elements of peace in the Middle East. And now, we
must build the road to those goals. Decades of bitter experience teach
a clear lesson: progress is impossible when nations emphasize their
grievances and ignore their opportunities. Storms of violence cannot
go on. Enough is enough.

And to those who would try to use the current crisis as an
opportunity to widen the conflict, stay out. Iran's arms shipments and
support for terror fuel the fire of conflict in the Middle East. And
it must stop. Syria has spoken out against al Qaeda. We expect it to
act against Hamas and Hezbollah, as well. It's time for Iran to focus
on meeting its own people's aspirations for freedom and for Syria to
decide which side of the war against terror it is on.

The world finds itself at a critical moment. This is a conflict
that can widen or an opportunity we can seize. And so I've decided to
send Secretary of State Powell to the region next week to seek broad
international support for the vision I've outlined today. As a step in
this process, he will work to implement United Nations Resolution 1402,
an immediate and meaningful cease-fire, an end to terror and violence
and incitement; withdrawal of Israeli troops from Palestinian cities,
including Ramallah; implementation of the already agreed upon Tenet and
Mitchell plans, which will lead to a political settlement.

I have no illusions. We have no illusions about the difficulty of
the issues that lie ahead. Yet, our nation's resolve is strong.
America is committed to ending this conflict and beginning an era of
peace.

We know this is possible, because in our lifetimes we have seen an
end to conflicts that no one thought could end. We've seen fierce
enemies let go of long histories of strife and anger. America itself
counts former adversaries as trusted friends: Germany and Japan and
now Russia.

Conflict is not inevitable. Distrust need not be permanent. Peace
is possible when we break free of old patterns and habits of hatred.
The violence and grief that troubled the Holy Land have been among the
great tragedies of our time. The Middle East has often been left
behind in the political and economic advancement of the world. That is
the history of the region. But it need not and must not be its fate.

The Middle East could write a new story of trade and development
and democracy. And we stand ready to help. Yet, this progress can
only come in an atmosphere of peace. And the United States will work
for all the children of Abraham to know the benefits of peace.